Tough times: Middle class losing grip on American dream

TOUGH TIMES

A decade ago, Mary and Jim Thompson were the epitome of America's middle class. They had a home in an Orlando suburb, two cars, good jobs, good benefits and a line of credit.

Six months ago, they were plotting how they could live out of their Jeep Cherokee.

"She was going to sew drapes so we could sleep in it," Jim said.

"We were hoping to hang on to our computers so we could keep looking for work," Mary said. "But everything else would have to go."

They had fallen behind on their mortgage payments. Mary, 45, was working only part time. Jim, 47, couldn't find work at all.

But the story of how the Thompsons tumbled to the brink of homelessness is not just about one family. To social-service workers, who see an increasing number of once-middle-class families losing their grasp on the American dream, it is the story of our times.

In April, a record quarter-million properties across the country had what the bankers call "foreclosure activity" -- default notices, auction sale notices and bank repossessions. Many are homes of middle-class families whose breadwinners found themselves out of work, overextended or struggling with expensive health-care bills.

The Thompsons were dealing with all of the above.

Serious health problems cost them their jobs: She had been an electronics technician, and he worked for Disney crafting characters' heads out of fiberglass. Without their jobs, there was no money to cover a middle-class lifestyle.

"And when it came to getting help," Mary said, "we were falling between the cracks."

No one agrees on exactly what "middle class" means. By certain federal standards, it's a family of four earning $30,000 to $70,000 a year. But studies show that most Americans think the term defines them -- including four in 10 Americans with incomes below $20,000 a year and a third of those who make more than $150,000 annually.

Last month, a survey released by the Pew Research Center found that fewer Americans now than at any point in the past 50 years think they're moving forward in life -- and nearly a third say they're moving backward.

All the Thompsons know is that they could feel a way of life slipping away.

Political football

In an election year, especially, the relative well-being of the middle class is a political football. Republicans accuse Democrats of painting a bleaker picture than reality warrants.

But James Wright, director of the Institute for Social & Behavioral Sciences at the University of Central Florida, said this much is known: "Since welfare reform, we have fewer people on welfare than we've ever had, we have more people in the labor force working more hours in more jobs -- and yet we have more homelessness and hunger than we've ever had, and the poverty rates have been going up now for seven consecutive years. I mean, you have to ask: What the hell is going on here?"

Steep increases in health-care costs, for one. In 2005, the latest figures available, disability caused nearly half of all mortgage foreclosures and 350,000 personal bankruptcies each year. It is the No. 1 reason those in the middle class fall into poverty.

There's also the steady loss of manufacturing and other jobs to workers overseas. There's downsizing, outsourcing and the hiring of contract or part-time workers with no benefits. There is dwindling membership in unions, which once protected the middle-class lifestyle. And too many people have run up too much debt brought on by too much easy credit.

"Large swaths of the population have gotten used to the idea of living every single month at the absolute limits of their paychecks, and haven't put anything away for the rainy day that now has dawned on us," Wright said.

Although that includes many upper-income families as well, the well-to-do have more of a cushion.

In Florida, the gap between have and have-nots is especially large.

"Florida ranks seventh for economic inequality -- the seventh biggest gap in the nation," said Emily Eisenhauer, a research associate at the Center for Labor Research and Studies at Florida International University. "Partly, that's the nature of Florida's economy, which doesn't have a huge manufacturing sector but does have a huge service sector."

In other words, there aren't a lot of jobs here for the middle class.

Jim Thompson would find that out the hard way.

'Hard to keep going'

For a year and a half, he applied every place he could think of, even for entry-level clerk jobs at Wal-mart and Kmart. He sent out hundreds of rM-isumM-is. All he landed was a part-time gig for UPS during the holidays. He worked seven days in December.

It was enough to nix their approval for food stamps.

"You reach a point where it's hard to keep going," Jim said.

They burned through Mary's retirement plan from her previous job and sold a collection of Disney lapel pins on eBay. They turned the thermostat up when it was hot and down when it was cold. And with no health insurance, they went to a $15-per-visit health clinic in Apopka and applied for prescription assistance.